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Kitsap Business and Economy Daily updates on the local economy, the latest reports and trends that affect us, stories, events and columns. Join the conversation with Kitsap Sun reporter Rachel Pritchett.

Monthly Archives: June 2011

Port of Bremerton leaders continue to watch The Boeing Co. very
closely for word whether it will build a new 737 airplane. A
decision is expected by the end of the year.
If the answer is yes, proposals to Boeing from cities interested in
locating an assembly plant in their locale might be submitted in
the first or second quarter of next year, port CEO Cary Bozeman
said Tuesday at a commissioners’ meeting.
Commissioners continue to show early interest in having the line
here. Land is abundant, and close to an airport and a rail line
that connects to the national grid, they said. On the down side is
getting to the port via narrow, twisted and congested highways.
Bozeman and commissioners discussed whether there was anything the
port could be doing now that it isn’t doing to be prepared for what
promises to be crowded competition in a high-stakes race.
Commissioner Bill Mahan reminded leaders that it pays to be more
ready than the other guy.
As proof, he said that Kitsap County governmental entities all
worked together to have information at hand during the U.S.
Department of Defense’ last round of base closings. Being ready
with information “put us heads and shoulders above many other
communities,” he said. “What we did in the county was far superior
to what any other community did in the United States.”
No local bases were closed, and in fact some of their missions were
increased, he said.
Now other communities use the Kitsap model, he said.
Mahan said the port should start gathering information for Boeing
now, while time is on its side. He spoke mostly of assessing port
infrastructure.
No decision was made, but Bozeman and incoming CEO Tim Thomson
continue to take part in monthly phone calls with a group of cities
also interested in having a Boeing line with them. The group was
called together by Gov. Chris Gregoire. They also are in touch with
U.S. Rep. Norm Dicks’ office.
“It’s high on the radar screen,” Bozeman said.
“We’re taking about 5,000 jobs here.”

Port of Bremerton commissioners on Tuesday agreed to raise the
monthly rent rate Brem-Air Disposal pays the port for 7.3 acres in
the Olympic View Industrial Park on which the company has its
offices and recycling warehouse. The increase was based on
increases amounts prescribed in a port resolution. The current
monthly rate of $2,572 will rise to $3,650 in December. The lease
was up for a five-year adjustment.

The price for a gallon on unleaded in Kitsap County was at $3.84
Monday, down from $3.96 a month ago, says AAA.

White House considers big boost to fuel economy
WASHINGTON (AP) — The Obama administration is telling American
automakers that it would like cars and light trucks to average 56.2
miles per gallon by 2025.
Government and industry sources familiar with the discussions say
that’s the number being floated by administration officials in the
early rounds of negotiations on a 2017-2025 fuel economy
standard.
The White House wants to boost fuel economy to reduce reliance on
oil and cut down on global warming pollution.
In early 2009, it brokered a landmark agreement that required
automobiles on average to get 35.5 miles per gallon by 2016 and set
the first-ever standards for greenhouse gases from tailpipes.
A formal proposal is due in September. The change would increase
the cost of vehicles, but that money would be recouped in fuel
savings.

The Associated Press
Signs that a widespread European debt crisis could be averted
helped send stocks up sharply Monday.
French banks agreed to accept slower repayment of Greece’s debt.
That would give Greece more time to meet its other immediate
financial obligations. French bondholders hold about $21.3 billion
in Greek government debt. Greek lawmakers are also debating
austerity measures that must pass before the country can receive
another financial rescue package to help avoid default.
The U.S. government, meanwhile, said that spending by consumers
decreased in May, after adjusting for inflation. April’s figures
were also revised downward, revealing the first decline since
January 2010. Consumer spending accounts for 70 percent of economic
activity.
Gas prices nearing $4 per gallon in late April and early May
curtailed spending on retail goods such as televisions and clothes.
Since early then, gas prices have fallen to about $3.57 per gallon.
Oil prices have declined steeply over the last few weeks, which
will translate into even lower pump prices. Lower gas prices could
help boost consumer spending in other areas in the coming
months.
Analysts said the rally was stronger than the economic news would
suggest in part because many traders invest when indices hit
certain pre-determined price levels.
In this case, the key number is 1,257 — the S&P’s break-even
figure for the year, said Todd Salamone, director of research at
Schaeffer’s Investment Research. The S&P approached that level
in March and again earlier this month. Both times, the market
rallied as so-called technical traders poured into the market.
The Monday-morning rally was driven by “a combination of trading on
that (break-even) level and a catalyst, the situation in Europe,”
Salamone said. “Whether we sustain it is another question.”
In early trading, the Dow Jones industrial average rose 111 points,
or 0.9 percent, to 12,046. The Standard & Poor’s 500 index rose
11, or 0.9 percent, to 1,279. The Nasdaq composite index rose 32,
or 1.2 percent, to 2,685.
All 10 industry groups in the S&P rose, with financials,
information technology and retail stocks showing the strongest
gains.
Shares of electronics maker Molex Inc. fell more than 4 percent,
the most in the S&P, after analysts with Ticonderoga Securities
downgraded the stock to “sell” from “neutral.” They said the slow
economy has hurt demand for tech gadgets such as the smart phones
that Molex manufactures.
After the market closes, athletic apparel maker Nike Inc. will
report on its financial performance in the fiscal fourth
quarter.
Broad markets have now fallen for seven of the past eight weeks as
traders received a string of dismal economic data showing that the
recovery is slowing. The Dow sank 1 percent on Friday, and the
S&P 1.2 percent, erasing last week’s gains for both indices.
The Nasdaq fell 1.3 percent on Friday.
The S&P and the Dow both are down 7 percent since they hit
their highs for the year on April 29. However, the Dow is still up
4 percent for the year, and the S&P is up 1.7 percent.
Europe’s debt problems have weighed on global markets in recent
weeks, with major indices reacting daily to the news about Greece’s
progress toward a second bailout. If Greece defaults, the fear is,
investors will lose faith in the financial strength of other
nations that have borrowed heavily or hold billions in Greek debt.
That could lead to the kind of credit crunch — when banks virtually
stopped lending to one another — similar to what sparked the
broader financial crisis after failure of investment bank Lehman
Bros.

Auto Club AAA predicts we’ll travel 2.5 percent less this Fourth
of July, thanks to still-high fuel prices. Here’s a statement from
the AAA received this morning. What are you doing for the Fourth?
Rachel Pritchett

Bellevue, Wash. (June 22, 2011) – AAA forecasts 39 million
Americans will travel 50 miles or more from home during the
Independence Day holiday weekend, a 2.5 percent decline from the 40
million people who traveled a year ago. The Independence Day
holiday travel period is defined as Thursday, June 30 to Monday,
July 4.

AAA projects a slight decline in the number of Independence Day
travelers mainly due to fuel prices. Travel by automobile is down
slightly, but air travel is up. The rising cost of gasoline is a
contributing factor to the increase in air travel, as the
increasing cost of travel by car is making air travel a more
attractive option for some travelers despite recent increases in
air fares.

Automobile travel down, impact of gasoline prices on travel
plans

Approximately 32.8 million people plan to travel by automobile
and that’s a decline of three percent, or almost a million auto
travelers, from the 33.7 million who drove last year. Automobile
travel remains the dominant mode of transportation (84 percent of
holiday travelers) and this year’s high gasoline prices, about 90
cents higher than a year ago nationally, are the main reason for
the decline.

Currently, the average price of self-serve regular unleaded
gasoline in Washington state is $3.87 per gallon, up 89 cents
compared to last year, but down 11 cents from a month ago. Gas
prices are up 78 cents in Idaho from a year ago, but down 7 cents
since one month ago, to $3.68 per gallon. Nationally, the average
price is $3.63 per gallon, up 90 cents compared to last year, down
21 cents in the past month.

A survey of Americans who intended to travel found that 56
percent said rising gasoline prices would not impact their travel
plans. For the remaining 44 percent who said rising gas prices
would impact their travel plans, seven out of 10 will economize in
other areas and three out of 10 are planning to take a shorter trip
or travel by a different mode of transportation. Travelers
concerned about how fuel prices will impact their travel budget can
use AAA’s free, GPS-based TripTik® Mobile application to compare
prices for all grades of gasoline at nearby stations.

Number of air travelers expected to increase by nine percent

Approximately 3.02 million leisure travelers (eight percent of
holiday travelers) will fly during the holiday weekend, a nine
percent increase from last year’s 2.75 million air travelers. This
increase continues a rebound in air travel that began in 2010
following the lowest years for air travel (2009 and 2008) in the
past decade. The remaining eight percent of holiday travelers are
expected to travel by other modes, including rail, bus and
watercraft.

According to AAA’s Leisure Travel Index, Independence Day
holiday airfares are expected to be 11 percent higher than last
year, with an average lowest round-trip rate of $213 for the top 40
U.S. air routes. Hotel rates for AAA Three Diamond lodgings are
expected to increase three percent from a year ago with travelers
spending an average of $147 per night compared to $143 last year.
Travelers planning to stay at AAA Two Diamond hotels can expect to
pay eight percent more at an average cost of $110 per night.
Weekend daily car rental rates will average $56, a three percent
increase over a year ago.

Average travel distance down seven percent; median spending up
25 percent from last year

According to a survey of traveler intentions, the average
distance traveled by Americans during the Independence Day holiday
weekend is expected to be 573 miles, which is seven percent less
than last year’s average travel distance of 617 miles. Median
spending is expected to be $807, an increase of 25 percent from
$644 last year.
AAA’s projections are based on economic forecasting and research by
IHS Global Insight. The Boston-based economic research and
consulting firm teamed with AAA in 2009 to jointly analyze travel
trends during the major holidays. AAA has been reporting on holiday
travel trends for more than two decades. The complete AAA / IHS
Global Insight 2011 Independence Day Holiday Travel Forecast can be
found at AAA.com/news.

Here is the list of the 244 organizations in Kitsap County that
have lost their tax-exempt status, for not filing returns for the
last three years. The vast majority of groups are defunct,
according to IRS spokesman David Tucker.

On Monday, the average price for a gallon of unleaded was $3.88,
according to AAA. Oil keeps dropping. See below.

Oil falls as worries about Europe continue
NEW YORK (AP) — Concerns about the European financial crisis are
still dragging down the price of oil.
Benchmark crude for July delivery fell 32 cents to $92.69 per
barrel in Monday midday trading on the New York Mercantile
Exchange. The July contract expires on Tuesday, and most of the
trading has switched to the August contract, which dropped 33 cents
to $93.07 per barrel.
All eyes remain on Greece, which is trying to implement tough new
austerity measures necessary to keep international aid coming to
help deal with its debt crisis. Without that aid, investors worry
that Greece’s financial troubles could spread to other European
countries.
Credit ratings agency Moody’s has warned that it may downgrade its
debt rating on three of France’s largest banks because of their
exposure to Greek debt. Moody’s said Monday that it may reduce
Italy’s credit rating due to that country’s poor growth prospects
and high public debt.
“The fear is that we end up with a banking crisis like 2008,” said
Michael Lynch, president of Strategic Energy & Economic
Research. “It’s a small possibility, but people are reacting to
that.”
Oil held just below $93 per barrel despite rising stock markets.
The Nasdaq and the Standard & Poor’s 500 index were up about
0.7 percent while the Dow Jones Industrial average rose nearly 0.8
percent.

NEW YORK (AP) — Stocks climbed for a third straight day on
Monday, the longest stretch of gains the market has had in nearly a
month.
Major indexes opened mixed but moved higher in midday trading,
putting the market further away from its longest weekly losing
streak since 2002. Last week stocks eked out tiny gains, giving the
Dow Jones industrial average and the Standard & Poor’s 500
index their first rises after a six-week slump.
The downturn, which began in early May, brought the S&P 500
close to its average level over the prior 200 days. So long as the
index doesn’t sink far below that level, many technical traders see
it as a sign to start buying stocks again. The S&P is now 6
percent below the 2011 high it reached on April 29.
“In the short term, stocks have been oversold, and you’re going to
get some sort of bounce, whether justified or not, just for
technical reasons,” said Paul Simon, chief investment officer for
Tactical Allocation Group, which has $1.5 billion in assets under
advisement.
The S&P 500 index is up 7 points, 0.6 percent, at 1,278. The
Dow Jones industrial average is up 71 points, or 0.6 percent, to
12,076. The Nasdaq is up 16, or 0.6 percent, to 2,632.